Discovery Communications First-Quarter Profit Declines Amid OWN Losses
UPDATED: The cable networks giant saw its revenue grow thanks to a stronger advertising haul and higher affiliate fees, but earnings declined amid losses from the Oprah Winfrey cable network joint venture.
Discovery Communications on Tuesday reported improved first-quarter revenue amid gains in advertising and affiliate fee revenue, but earnings declined and came in slightly below Wall Street expectations as the company had to include losses from its Oprah Winfrey cable network joint venture OWN.
The company also announced an additional $1 billion authorization for further stock buybacks.
The cable networks company, led by CEO David Zaslav, posted quarterly earnings of $221 million from continuing operations, up 9 percent from the year-ago period when excluding an item that had been included in the year-ago results. In the year-ago period, the firm realized a gain of $102 million when it converted its Discovery Health network to OWN. Including this in the year-ago figure, Discovery's latest quarter profit declined from $305 million a year earlier. Wall Street had on average forecast earnings of $233.8 million for the latest period.
During the quarter, the company said it began recording 100 percent of net losses from OWN as its losses exceeded the equity that it had contributed to OWN. Discovery didn't immediately detail the size of the OWN losses. OWN in the latest quarter laid off staff and cancelled its Rosie O'Donnell show, which affected the quarter.
Discovery Communications' revenue rose 16 percent to $1.10 billion. Analysts had been looking for $1.06 billion on average. U.S. advertising revenue rose 13 percent, with affiliate fees rising 23 percent.
"Discovery is off to a great start in 2012 with strong first quarter results that built upon the consistent financial and operating momentum we generated throughout 2011," said Zaslav. "Viewers around the world are spending more time with our networks than ever before, and we are leveraging the demand for our programming across a worldwide ad market that remains healthy. The universal appeal of our content is also providing us further opportunities to capitalize on developing distribution systems and an evolving global pay TV landscape.”
"After dominating the competition in the first quarter, Discovery is out to a sizeable lead in the second-quarter ratings race," Barclays Capital analyst Anthony DiClemente said in a research report on Friday. "So far, Discovery Communications total company ratings are up 15 percent in the quarter, trailed by News Corp. (plus 9 percent year-over-year) and Scripps Networks Interactive (plus 5 percent), while many of the other cablers remain in negative territory."
- Prince Takes Over the 'Arsenio Hall Show,' Debuts New Funky Song
- A Train, a Trestle and 60 Seconds to Escape: How 'Midnight Rider' Victim Sarah Jones Lost Her Life
- 'Divergent' Star Shailene Woodley: The Next Jennifer Lawrence?
- 'Noah' Banned in Several Middle Eastern Countries
- Lindsay Lohan's OWN Series Gets First Official Trailer (Video)
- MOST SHARED
- MOST POPULAR
- Pee-wee Herman's Bike From 'Pee-wee's Big Adventure' Sells For $36,600 On eBay
- HUVr Hoverboard Is Not Shipping In December (Or Ever, For That Matter)
- Stratosphere: A Conversation with Matt Sorum and Album Preview
- 'Grey's Anatomy' 'You Got to Hide Your Love Away' Recap: Yang and Owen Back in the Sack